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The slowdown in advanced economies in Q1 was partly a result of weak consumption growth. But we think that household spending will recover in Q2 and grow at a decent pace during the rest of 2018. … Household spending growth likely to rebound in …
17th May 2018
Argentina’s currency crisis and turn to the IMF for financial support have raised questions about how much ammunition EMs’ foreign exchange reserves provide. On the broadest measure of external financing needs, Venezuela, Ukraine and Turkey are, along …
15th May 2018
Oil price movements have big effects on individual economies, companies and assets. But we suspect that their impact on aggregate global demand is smaller now than it was a decade or two ago. This is due to the fiscal situation in the Gulf, the shale …
In March, broad money growth slowed a bit in the euro-zone, UK and Japan. Indeed, in the euro-zone it dropped to its slowest rate since the ECB started its Asset Purchase Programme in early 2015. However, in all of these cases, the pace of money growth is …
11th May 2018
The current troubles in Argentina and Turkey are not the start of a systemic emerging markets crisis, but we do think that EM growth will slow this year. With a US-led slowdown in advanced economies likely next year, global economic growth will probably …
10th May 2018
The weakness in advanced economies early this year, which was largely driven by softer household spending, looks like a temporary setback rather than anything more ominous. Admittedly, economic growth may have passed its peak in the euro-zone, and has …
4th May 2018
Business surveys for April, published today, suggest that global manufacturing conditions started Q2 in good shape and support our view that world GDP growth will pick up a bit in Q2. … Global Manufacturing PMI …
2nd May 2018
The fact that the slowdown in advanced economies has been so broad-based raises the question whether it is more than just a blip. However, strong business surveys and fundamentals suggest that economic growth will rebound in the coming months. We don’t …
Germany faces little threat from the US aluminium and steel tariffs that might come into force this week, but would be hit harder than most other European economies if the US imposed broader tariffs. That said, these alone would probably only dent …
30th April 2018
Despite economic activity slowing in Q1, we expect the Fed to press on with three more rate hikes this year, not least because inflation has been higher than anticipated in recent months. But in the euro-zone and Japan, where both economic activity and …
Today’s landmark summit between the two Koreas should help to remove a major tail risk for the region’s markets and economies. However, the impact on South Korea’s economy of an easing in tensions is unlikely to be that significant. … Summit talks and the …
27th April 2018
Data published earlier today show that global trade was expanding rapidly in the three months ending in February. More timely business surveys suggest that it may have slowed since then, but they have not yet fallen far enough to cause major concerns. … …
25th April 2018
We think the recent rise in oil prices is likely to be reversed. But even if prices rose steadily to $100pb, there would be little fallout for global growth, despite an increase in headline inflation. … World economy can cope with higher oil …
24th April 2018
The business surveys for April, published by Markit today, support our view that the weakness of some of the recent data for advanced economies probably doesn’t mark the start of a sustained slowdown. … Flash PMIs …
23rd April 2018
Despite some weakness in the first quarter, and concerns about protectionism, global economic growth is likely to hold up well this year. In advanced economies, the outlook for investment and household consumption is fairly bright. Tightening labour …
20th April 2018
The IMF’s latest Fiscal Monitor has put the rise in EM public debt over the past decade back under the spotlight. While debt ratios have increased across most of the emerging world, major vulnerabilities are concentrated in a few relatively small …
19th April 2018
Forget Brexit – the biggest thing to happen to the UK economy over the next couple of years could be the advent of a Labour government, and a particularly left-wing one at that. On the plus side, this could bring a small fiscal boost and a softer Brexit. …
18th April 2018
Even if the US and China were to follow through on their recent protectionist threats, the impact on global growth in the next year or two would be small. Moreover, a bigger and more damaging escalation of protectionism seems unlikely, at least in the …
China’s bilateral trade surplus with the US and concerns about unfair trade practices are likely to keep US-China trade tensions boiling for a long time. But China’s overall current account surplus is much less of a concern for the world economy than it …
12th April 2018
In an attempt to de-escalate trade tensions, Xi has pledged to speed up efforts to reduce trade and investment barriers, boost competition and bolster intellectual property protections. This could provide Trump with an opportunity to back down from his …
10th April 2018
While we still think that negotiations will win out over all-out trade war, the risks of a damaging trade conflict breaking out between the US and China have risen. If the latest US-proposed tariffs on an additional $100bn worth of Chinese exports were …
6th April 2018
The weakness of some recent economic data and business surveys has raised concerns that the global expansion is running out of steam. But we estimate that world GDP growth picked up a bit in the first quarter, closing the gap with overly-positive survey …
Growth of almost all monetary aggregates slowed in major advanced economies in February, but we are not worried for three reasons. First, money growth has only slowed a bit. Second, changes in money growth tend to lag, not lead, changes in real activity. …
4th April 2018
Markit’s global manufacturing PMI fell by the most in two years in March, providing further evidence that global growth has passed its peak. Nonetheless, the PMI remains at a high level and we think that the world economy will still expand by a decent 3½% …
3rd April 2018
The recent weakness of some economic data, business surveys and equity markets has raised fears that the global expansion is now fizzling out. We think that China will slow later this year and the US is likely to do so next year. But we do not see …
29th March 2018
We expect the Fed to raise interest rates three more times this year, and twice in 2019, but we think it will then begin to loosen policy in 2020. Other than the Bank of England, most major central banks will lag a long way behind the Fed in raising rates …
28th March 2018
An analysis of all the recessions which have occurred in G7 economies since 1960 throws up two main conclusions. First, while most had multiple triggers, monetary policy tightening was usually one of them. And second, the most common underlying causes of …
27th March 2018
As expected, on Friday the EU Council endorsed a transition period and the opening up of a new strand of negotiations on the future relationship. But unless the UK can come up with a solution to the Northern Ireland border issue, under the terms of the …
23rd March 2018
On the same day the US and China exchanged fire in what is potentially the beginning of a trade war, data published by the CPB Netherlands Bureau show that world trade made a great start to 2018. And leading indicators point to world trade volumes …
The economic impact of the tariffs which have been announced by the Trump administration will be small, even if they are implemented in full, and we suspect that any retaliation will be moderate. But fears that the rest of Trump’s presidency will be …
Preliminary PMIs, published by Markit today, slipped at the end of the first quarter. But they still support our view that GDP in advanced economies will expand by a decent 2½% or so this year. … Flash PMIs …
22nd March 2018
The US Fed’s decision to increase rates by 25bp yesterday and to raise its projection of future rate hikes has limited implications for the rest of the world. Other than the Bank of England, most major central banks will be well behind the Fed in raising …
The Fed’s decision to raise interest rates by 25bp today was widely expected but some investors may have been caught off-guard by the degree to which Fed officials increased their projections for future interest rate hikes. The median forecast for the fed …
21st March 2018
Finance ministers from the G20 are not going to resolve the differences between the US and most other members of the group on trade policy this week. They may, however, make a commitment to reduce excess steel capacity and bilateral imbalances, which …
19th March 2018
Commodity prices tend to go through extended boom and bust periods, sometimes known as super-cycles. The presence of super-cycles in commodity prices matters for a number of reasons but most importantly they can help to determine the long-term prospects …
16th March 2018
We expect the inflation rate in the G7 economies to average less than 2% this year and next. This is partly because average earnings growth has remained weaker than might have been expected given the recent increase in employment, and also because there …
14th March 2018
A sweeping overhaul of the structure of China’s government unveiled at the National People’s Congress today could improve financial regulation, reduce red tape for business, and boost productivity in agriculture, if implemented well. But the changes also …
13th March 2018
The Trump fiscal stimulus, which has turned out to be larger than seemed likely a few months ago, should boost economic growth in the US a little, and encourage the Fed to press on with six rate hikes between now and mid-2019. But at a global level, any …
9th March 2018
It looks increasingly likely that President Trump’s plan to impose tariffs on imports of steel and aluminium on grounds of national security will be implemented in some form. If so, other governments including the European Union, will respond with …
7th March 2018
Markit’s PMIs have recently pointed to faster economic growth than the official data show, once again raising questions about their accuracy. However, even if they are currently over-stating growth a bit, we think they are still the most accurate timely …
6th March 2018
The lengthy political uncertainty that seems likely to follow Italy’s election is unlikely on its own to do much economic damage. But we suspect that the prospect of looser fiscal policy, higher debt, and the possibility that the Five Star Movement once …
5th March 2018
President Trump’s plan to raise tariffs on US imports of steel and aluminium does not pose an immediate threat to the world economy. Together they account for only a small share of world trade, and we suspect that any retaliation from key trade partners …
The steel and aluminium import tariffs announced by the US yesterday are unlikely to have a major impact on emerging economies but fears that they might presage a broader shift towards protectionism have nonetheless rattled EM markets today. With this in …
2nd March 2018
Steel and aluminium account for about 2% of world trade, so the direct impact on the global economy of the tariffs President Trump announced yesterday would be minimal. But the fact that they are being justified under a flimsy pretext of national security …
Markit’s global manufacturing PMI once again held up close to a seven-year high in February, which sits well with our view that 2018 will be another strong year for global growth. … Global Manufacturing PMI …
1st March 2018
Central banks in the major advanced economies are now moving in the same direction, but they are doing so at very different speeds. The Fed is tightening policy in earnest, with six rate hikes likely by mid-2019, and we expect the Bank of England to raise …
27th February 2018
The “Canada plus, plus, plus” deal, including single market participation for some sectors, which UK Cabinet ministers reportedly agreed to this week is unlikely to be accepted by the EU in its current form. … Cabinet consensus won’t unlock …
23rd February 2018
